What to do when you are in dispute with your customer

Jobs don’t always go smoothly. We look at some tips to prevent problems turning into a dispute.

If you are in dispute with one of your customers, be reassured – you are not alone. Almost three quarters of small businesses have been involved in a dispute over the last few years, with even the very best traders having jobs that don’t go to plan.

Disputes cost small businesses in England and Wales at least £12 billion each year, according to a report from the Federation of Small Businesses. Most disputes centre around late or non-payment. The average cost of resolving a dispute for a small business is nearly £17,000, in comparison to the average value of such a dispute of £18,000.

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When you are in dispute with your customer

When you are facing problems with a job, the last thing you need is for it to escalate into a dispute. It can be challenging when someone criticises your work or your business that you have poured so much energy and time into, but it is important to remain calm and impartial. Complaints, when handled well, can be an opportunity to create customer loyalty.

We know that sometimes your customers change their minds to the extent that it becomes unclear what was originally agreed, they may ask for additional work beyond the original contract, or a few have unrealistic expectations compared to the finished product. We also know that things don’t always run smoothly, delays occur in getting materials and other factors which may be beyond your control. And sometimes, given that we are all human, there may be mistakes made on either side.

If you are facing a difficult situation with one of your customers, ideally you want to find a resolution to avoid an official dispute. We would suggest:

• The most important thing is always to remain calm.
• Arrange to meet your customer and record all the issues that you both have in writing. This might be issues the customer has or problems you are experiencing. You may want to revisit the quotation and contract with your customer so that it is clear what you agreed to do and in what timeframe.
• Try to agree a way forward, even if it doesn’t resolve all the issues. Even a partial agreement shows you are reasonably trying to achieve a resolution and a successful outcome.
• If you cannot find a resolution, direct your customer to make use of the independent dispute resolution service. Remember they are completely impartial and if you have acted with reasonable skill and care then you will have nothing to fear.

The bottom line is that if you cannot achieve an amicable resolution then you will have to sue, so it is always preferable to come to an agreement, if you can.

Avoid problems turning into disputes 

The earlier you try to resolve issues the more likely you will have a positive outcome. Keep communicating with your customer during the course of a project. If you can maintain a positive, open relationship, they will feel more confident about raising any issues as they arise – before they become a major problem.  

You can help yourself to avoid disputes by:

• Clearly setting out in writing what you are going to do and to what timescale.
• If there are any changes in what has been agreed, detail these in writing ensuring that both you and your customer understand what else you will do and how this will affect the price and the completion date, before you start the additional work.
• Be upfront when things go wrong, talk to your customers to explain what has gone wrong and agree a way forward.
• Seek advice from your local Trading Standards service for advice or contact us.